Big Data: Ready for Takeoff?

Insurers are eager to begin leveraging big data and analytics, but there’s a lot of preliminary work that has to be done before they can get to the next level.

Insurance technologists, like their peers across industries, have been tasked with untangling the concepts of big data and analytics. The buzzy terms have taken over not just tech circles, but seemingly the entire corporate enterprise, as all business units look for solutions to tap into the supposed wealth of consumer and market information that provides a competitive advantage.

Establishing data management standards and expertise, and understanding data warehousing, are key projects that insurers must complete before they can tap into the wealth of available data, says Susan Helm-Murtagh, VP of analytics at Blue Cross and Blue Shield of North Carolina (Raleigh, N.C.; 3.7 million policyholders).

Susan Helm-Murtagh, Blue Cross and Blue Shield of North Carolina

"The thing that isn't being talked about when people talk about big data is the importance of data management," she says. "If we don't understand data certification and standardization, how to build data models and exchange data with an increasing number of partners, we're going to have problems."

All companies struggle with reaching a consensus on the definition and scope of big data, as well as where to begin and its potential applications. But insurance companies have always, in a way, been stewards of big data, industry experts say. And so for many insurers, the journey to an analytic enterprise begins at home, in using newly available technologies to build a framework around that data."

There are huge stores of data that are not well-structured at insurance companies. There's lots of forms and documents exchanged," says Adam Kornick, business leader for big data and analytics at Progressive (Mayfield Village, Ohio; $1.2 billion in premiums written, 2013). "I think the ability to take all of that and make predictions based on that is something that previously wasn't feasible."

That's what's been going on at Imperial Fire & Casualty (Opelousas, La.) for about seven years, says COO Duane Heady.

"The insurance industry is overwhelmed with information. Many of us are just data junkies; we can't have too much," he says. "But much of the data that companies are dealing with is legacy data that is difficult to handle, and you're limited in what you can do with it."

Imperial decided about seven years ago to build a data warehouse to get all its data on a common platform. But that turned out to be the easy part. From there, Imperial struggled with an inability to gain in-sights from its data, Heady explains. "We invested heavily in our IT systems, and we certainly had the data in our ware-house and we knew it would be good. But extracting that data could be difficult. You had to go through a query and set up a report," Heady says.

And those reports lacked redundancy, he adds. Each business unit had unique needs from the data, and even within units, different users had different ideas.

"A lot of our folks like to look at things a little differently. You had all these reports with the same information, but they weren't uniform," Heady says. "People within the organization, depending on where they are or what department they fall in, might look at the data in a slightly different way."

So Imperial recently completed implementations of a business intelligence dashboard from Domo and analytics software from Innovation Group, to help it get effective insights from the stored information. It's an existential project, Heady says.

"I had the sense that in order for us to compete, because we are a smaller regional carrier, we aren't going to win on size. Many times we're competitive on our relationships," he says. "All those small details make the difference between companies that are profitable and not profitable. We can grow also through acquisition, and with what we've implemented, we can take on additional companies and settle them into our tech, utilizing our tools and resources."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

This is pretty much it Gă÷ sentiment among the people I interviewed was that they want to get to big data, but don't want to patch together systems for what might be an entirely new paradigm of data relationship over the next 20+ years. Insurers want to do it right the first time so as analytcs get more involved they have a great base to build on.

We're helping a lot with customers these days with visualizations, analytics, and big-data. So many use cases, so little time. Here's an example of something I was working on for an energy company. I'm sure Chevron's public relations team was in the hot seat for this one.

Nathan, Big Data is a big deal. We definitely are seeing an increase in activity with companies responding to the impact big data has made on their business. For companies any size, getting meaningful insights from data analytics is an important priority. LexisNexis has open sourced its HPCC Systems big data platform which represents more than a decade of internal research and development in the big data analytics field. Designed by data scientists, their built-in libraries for Machine Learning and BI integration provide a complete integrated solution from data ingestion and data processing to data delivery. More at http://hpccsystems.com

It also suggests to me that this concept of leveraging investments made for compliance, risk management & other requirements continues to be more concept than reality. Not sure if that's because FIs aren't taking a big picture view (and are viewing these initiatives at one-offs) or that it's really hard to do that.

It seems that lack of proper technology infrastructure is the main thing impeding financial services cos from really mining all their data and taking advantage of it like Amazon etc. There will be some growing pains over the next 3-5 years, but most will undergo the neccessary restructuring to take advantage of big data going forward.

I have to say I am a bit surprised to read that so many companies appear to be still in the relatively early stages of updating their architecture to support big data/analytics. I understand it's a massive and ongoing undertaking, but we didn't just start talking about this last year -- and these investments are essential to do almost everything insurers hope to improve in terms of performance, efficiency, compliance ... not just insight. Let's just hope that there aren't (too many) new competitors that already have mastered the infrastructure needed to support analytics prowess that take advantage of the delay.